Reliance on other party’s statements

We recently reported on the authority of UK Insurance Ltd v Stuart John Gentry [2018] EWHC 37 (QB) dealing with the issue of what adverse inferences could be drawn from the absence of (what might be seen as) material witnesses.

The Court of Appeal had cause to consider an adjunct to this question earlier this month when they handed down judgment in Property Alliance Group Ltd v The Royal Bank of Scotland Plc [2018] EWCA Civ 355. The facts of the case are not important to this article but the comments towards the end of the Court of Appeal’s judgment on whether a party can rely on a statement served by the other side where that witness has not been called to give evidence are.

Before addressing that it is fair to note that the Court of Appeal did, albeit briefly, comment on the absence of material witnesses when it said:

No litigant is obliged to call witnesses to satisfy the curiosity or enthusiasm of his opponent. It was always open to PAG to subpoena any witness it thought would be helpful to the Court. The fact that a party who might be expected to produce witnesses does not do so may sometimes speak volumes but it is a matter for the Judge to decide whether it does so in a particular case. The critical question in the present case was whether manipulation of GBP LIBOR had taken place. The critical witness for that purpose was Mr Thomasson. If he was believed, there was nothing relevant for senior management to know; if he was not, RBS’s case collapsed anyway. The Judge did say (paragraph 461) that RBS’s decision not to call Mr Cummins (and a Mr Nielsen) in connection with the allegations of lowballing did not reflect well on RBS and repeated this in her decision on whether RBS had been fraudulent (paragraph 485). She was well aware of Mr Lord’s case (paragraph 479) but in the end was not prepared to draw an adverse inference. We do not think the Judge can be criticised.

Turning back to the potential reliance on the witness statements of those not called to give evidence, the Civil Procedure Rules seemingly makes the position clear at 32.5(5):

“(1) If –

(a) a party has served a witness statement; and

(b) he wishes to rely at trial on the evidence of the witness who made the statement,

he must call the witness to give oral evidence unless the court orders otherwise or he puts the statement in as hearsay evidence.

(5) If a party who has served a witness statement does not–

(a) call the witness to give evidence at trial; or

(b) put the witness statement in as hearsay evidence, any other party may put the witness statement in as hearsay evidence.”

The Court considered previous authority on this point, in particular McPhilemy v Times Newspapers Ltd (No. 2) [2000] 1 WLR 1732, and in an admirably clear pronouncement concluded:

In our view, CPR 32.5 is not applicable where a party wishes to put in only part of a witness statement. The rule itself refers to “the witness statement” being admitted, not merely some of it. Further, it makes sense that a party wanting to rely on something said in a statement should have to place all of the statement before the Court. A Court asked to attach significance to a passage from a statement should have before it the totality of what the witness said. There would otherwise, as the Judge noted in paragraph 296 of her judgment, be “real concern that cherry picking out of context would arise”. It would, moreover, be odd if a party were free to contend for the reliability of what the witness said in a particular passage while withholding the balance of the statement because he disputed it. That, in fact, would seem to have been the position in the present case had the Judge acceded to PAG’s application. PAG, we gather, was unwilling to put in Mr Sefton’s witness statement in its entirety because most of what he said was adverse to its case. It follows that, in our view, the Judge was correct to refuse PAG’s application.

It may be that in housing fraud trials less attention is paid to the content of trial bundles in the context of those witnesses not being called, and certainly proper legal analysis of the status of such evidence is rarely entered into, but this case highlights both the basic rules applicable and their proper application and may prove significant in the “right” case.